Michael McGrath (Cork South Central, Fianna Fail)
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Question 141: To ask the Minister for Finance if, since coming into office, he has had any communication, verbal or written, with the covered financial institutions in relation to their mortgage interest rate policy; and if he will confirm if he requested the said institutions to absorb the ECB interest rate increases of April and July. [27132/11]

Michael Noonan (Limerick City, Fine Gael)
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The implementation of the goals as set out in the Programme for Government which the Deputy refers to will be introduced in a measured way and in accordance with the Government's priorities over the period of the Programme.

The Deputy will be aware that as part of the restructuring and recapitalising plans announced last March as part of the PCAR and PLAR exercise, the banks are engaging in cost cutting plans which are already underway.

I also refer to the consolidation of the banks around two pillar banks made up of the merger of AIB and EBS, alongside Bank of Ireland. The merger of AIB and EBS which concluded last week will enable costs saving through shared services and economies of scale. By deleveraging non-core assets, the banks will be better placed to focus on supporting the domestic economy.

The effects of these changes will bring about cost reductions which will improve operating margins and permit the banks to better absorb funding costs. The Government remains in consultation with the banks in connection with the more significant parts of these plans including a significant reduction of employee numbers.